Beyond Meat preps for IPO as rivals take bite out of food industry

In 2018, Beyond Meat brought in a net revenue of $88m, and lost $30m. Photograph: George Whale

Wall Street is going vegan. At some point in the next four weeks, Beyond Meat, a pioneering plant-based meat alternative startup, will debut on Wall Street at a valuation of about $1.2bn. And in the meantime its rivals are cutting deals with some of the biggest names in food.

Beyond Meat is the latest in a series of “unicorns” – private companies valued at over $1bn – to go public. And this one is edible.

The company, based in El Segundo, California, was founded 10 years ago by tech entrepreneur Ethan Brown. It found early backing from legendary Silicon Valley financiers Kleiner Perkins Caufield & Byers – and later from Bill Gates and Leonardo DiCaprio – before it brought its first product, a chicken-free “chicken”, to market in 2013.

Now the company is going public, at a pivotal moment for meat-like products created from plant-based protein, mainly yellow peas, which are being used to create a new wave of burgers (which actually “bleed” with beet juice), together with poultry and sausage substitutes that taste far closer to the real thing than their predecessors.

The benefits of eating less meat from both ethical, environmental and health standpoints, have never been greater. And the business community has spied the potential for big profits.

Two weeks ago, Beyond Meat’s main competitor, Impossible Foods, launched a meatless Whopper at Burger King, and the fast-food chain Del Taco announced the development of a meatless taco.

Even giant meat companies such as Tyson, the world’s second largest processor of chicken, beef and pork, are backing meat alternative startups. It is investing in cultured meat maker Future Meat Technologies, which grows meat from cells.

Memphis Meats, another company developing cultured meats, boasts the vast Cargill grain company among its investors, alongside Gates, again, and Sir Richard Branson.

Wall Street’s interest doesn’t stem from a new found love of veganism. US meat production totalled 52bn lb in 2017, poultry production totalled 48bn lb. Beef exports alone are worth over $7bn a year.

The goal of Beyond Meat’s Brown is to recreate meat with plant-based inputs. “We don’t want you to walk away from meat, we’re just taking animals out of the equation,” he said in an interview with CBS, citing figures that show 70 million Americans are reducing their intake of meat.

In a letter written by Brown included in Beyond Meat’s IPO prospectus, Brown insists: “We do not face a binary decision to eat or abandon meat.”

He describes livestock as “a bioreactor consuming vegetation and water and using their digestive and muscular system to organize these inputs into what has traditionally been called meat”. Beyond Meat, he says, does the same, without the animal.

So far, Beyond Meat is consuming cash. In 2018, it brought in a net revenue of $88m, and lost $30m. A year earlier, revenues were nearly $33m, and the company made a loss of $30m.

But that could change fast if alternative meat products can take just a small bite out of the $1.4tn global meat market, or mirror the success of non-dairy milk products – which in the US is now 13% of the size of the traditional dairy milk business.

As consumers increasingly turn to plant-based meat alternatives, the only limit for growth maybe the availability of plant-based protein to make products from.

Just five years since the launch of its debut product, Beyond Meat products are now available at 30,000 outlets in the US and overseas, from Whole Foods and TGIF in the US to Tesco and All Bar One in the UK.

According to Dan Altschuler Malek, a venture capital partner at New Crop Capital, an early investor in Beyond Meat, the meat, dairy, egg and seafood sectors are a trillion-dollar market ripe for large-scale disruption.

“We believe the global food system is broken and one of the contributors is animal agriculture which has caused significant damage to the environment,” said Malek. “At some point, the planet will hold 9 billion-plus people, and the reality is there are not enough resources to sustain current levels of protein consumption.”

Beyond Meat, Malek says, is the third generation of plant-based products. The first was for vegans who, for philosophical reasons, sacrificed pleasure for beliefs in refusing animal proteins. The second generation developed products with taste and flavor. In the third generation, companies like Beyond Meat looked to develop products that are good enough on their own to consume without any sense of loss or substitution.

“That’s a seamless transition for the consumer and that’s what the third generation of producers are doing. Manufacturing technology has played a large part. Now we have a convergence that fulfill the promise of great taste and texture for consumers.”

Ultimately, Malek believes, we may begin to detach from the need for plant-based protein to resemble meat products. But now it’s still early days and consumers still want something that they already know.

“You can’t make them jump across two axes, simultaneously, switching ingredients and switching flavor. Eventually we’ll get to a place where products don’t need to resemble chicken or beef or lamb. They will simply be delicious and plant-based.”

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